Full Year Results Presentation

1
Full Year Results Presentation

• 12 Months Ended 31 December 2008
• 10 March 2009

2
Agenda

• Introduction and Highlights Ray King, Chief
  Executive
• Group Financial Review Tom Singer, Group Finance
  Director
• Segmental Results Tom Singer, Group Finance
  Director
• - UK Insurance
• - International Insurance
• - Care Homes
• - Other Health Services
• Cash and Debt Tom Singer, Group Finance
  Director
• Strategy and Outlook Ray King, Chief Executive

3
Some key numbers
190 Bupa operates in over 190 countries
10.3 million 10.3 customers worldwide and 24
million lives served by Health Dialog
No.1 or 2 player In six markets in which Bupa
operates
81 81 of UK customers rate Bupa as excellent
or very good
52,000 More than 52,000 people are employed by
Bupa
4
Bupa market context

• Healthcare market generally resilient in economic
  downturns
• Bupa has strong brands, market positions and
  balance sheet strong should get stronger
• Long term trends in disease patterns and
  demographics underpin growth
• Government budgets under pressure will need to
  partner with private sector

5
Bupa 2008 financial highlights

• Revenues from continuing operations up 39 to
  5.9bn (organic growth 9)
• Statutory surplus before tax down 53 to 187.1m
  primarily due to alternative asset performance
  and impairments of goodwill capitalised on
  previous acquisitions
• Underlying surplus before tax(i) increased by 9
  to 408.6m (up 4 in constant currency terms)
• Net cash generated from operating activities up
  1 to 409.6m
• Leverage(ii) 34 (38 at half year 2008)
• Good progress on integration of acquisitions and
  synergies in line with or ahead of expectations

• For definition, see appendix
• Gross debt (including hybrid debt) divided by
  (gross debt equity)

6
A busy 18 monthswith focus now on integration
and organic growth
2009 / 2010
Strong focus on integration of acquisitions
Drive organic growth
Continued prudent cost, cash and capital
management
Pursue selected business development opportunities
7
Agenda

• Introduction and Highlights Ray King, Chief
  Executive
• Group Financial Review Tom Singer, Group Finance
  Director
• Segmental Results Tom Singer, Group Finance
  Director
• - UK Insurance
• - International Insurance
• - Care Homes
• - Other Health Services
• Cash and Debt Tom Singer, Group Finance
  Director
• Strategy and Outlook Ray King, Chief Executive

8
2008 Financial overview
Underlying surplus (m)
Revenues (m)
Statutory surplus (m) (i)
5,865
398
409
374
4,236
53
9
187
39
2007
2008
2007
2008
2007
2008
Net cash generated from operating activities
(m)
Net cash generated from operating activities (m)
Equity attributable to Bupa (m)
Leverage(ii) ()
34.1
3,584
410
3,346
406
23.3
7
1
46
2007
2008
2007
2008
2007
2008

• Surplus before taxation expense
• Gross debt (including hybrid debt) divided by
  gross debt plus equity. 2007 figure unusually low
  following sale of Hospitals business

9
Revenues(i)
2007 ()
2008 ()
UK Insurance International
Insurance Care Homes Other Health Services
By segment
UK Australasia Spain Rest of World
By geography
Total 5.9bn
Total 4.2bn
(i) continuing operations only
10
Underlying surplus 2008

• Relates to 2007 sale of Hospitals business
• Other items principally includes adjustments
  relating to Bupa Ireland, realised and unrealised
  foreign exchange gains and losses and various one
  off items

11
Cash generated from operating activities
12
Agenda

• Introduction and Highlights Ray King, Chief
  Executive
• Group Financial Review Tom Singer, Group Finance
  Director
• Segmental Results Tom Singer, Group Finance
  Director
• - UK Insurance
• - International Insurance
• - Care Homes
• - Other Health Services
• Cash and Debt Tom Singer, Group Finance
  Director
• Strategy and Outlook Ray King, Chief Executive

13
UK Insurance 2008 Financials
UK Membership, Bupa International, Bupa Health
Assurance, Bupa Wellness, Bupa Health Dialog (UK)

• Organic growth in customer numbers of 2
• UK membership experienced a decrease in surplus
  due to higher lapses and contractions towards the
  year end and increased development expenditure
• Bupa International saw growing revenues, surplus
  and customer numbers
• BHA had a good year increasing revenues in both
  its individual and group risk businesses
• Bupa Wellness grew revenues and refined
  proposition
• Bupa Commissioning merged with the UK arm of
  Health Dialog

• Decreased 9 in constant currency terms

14
International Insurance - 2008 Financials
Bupa Australia, Sanitas, Saudi Arabia, LatAm,
Scandinavia, Hong Kong and Thailand

• Growth in surplus held back by 14.5m
  development costs, 11.5m write-off of deferred
  acquisition costs in the LatAm Life business and
  10.3m impairment charge against information
  systems
• Bupa Australia / MBF
• -Bupa has more than 3m customers
• -Merger well advanced and synergies ahead of
  expectations
• Sanitas PMI customers increased by 3.6 over the
  period to 1.5m
• Other units (Bupa Middle East, Hong Kong,
  Thailand) performing well

• Increased 12 in constant currency terms

15
Care Homes 2008 Financials

• Organic growth in revenues driven by an increase
  in numbers of residents coupled with modest rises
  in fee rates
• Excluding the acquisition of BACA, surplus
  decreased by 6 reflecting an increased
  depreciation charge (4m in the period) following
  the revaluation of UK and Spanish care homes in
  2007 and higher operating costs
• Bupa Aged Care Australasia (BACA) traded in line
  with expectations
• Invested 89m in 2008 developing the total
  portfolio
• Own circa 80 of freeholds on care homes portfolio

16
Other Health Services 2008 Financials
The Bupa Cromwell Hospital Private hospital in
Central London

• Revenues grew strongly due to the acquisition of
  Health Dialog and The Bupa Cromwell Hospital
  combined with strong revenue growth in Bupa Home
  Healthcare
• Surplus increased to 22.3m. The positive impact
  of acquisitions was partially off-set by a
  reduced surplus from Bupa Home Healthcare mainly
  due to business development costs and lower
  margins

17
Agenda

• Introduction and Highlights Ray King, Chief
  Executive
• Group Financial Review Tom Singer, Group Finance
  Director
• Segmental Results Tom Singer, Group Finance
  Director
• - UK Insurance
• - International Insurance
• - Care Homes
• - Other Health Services
• Cash and Debt Tom Singer, Group Finance
  Director
• Strategy and Outlook Ray King, Chief Executive

18
Cash and investment portfolio
3,000
2,000
m
1,000
0
(i)
2007
2008
Alternative assets
Financial investments
Cash cash equivalents

• gt90 of overall portfolio held in bank deposits,
  CDs, FRNs at AA-/Aa3 or better
• However, 97.7m loss on alternative assets in
  2008
• Risk reduction exercise in Q4 2008 to reduce
  holdings in some alternative asset classes

• Excludes assets held in Australian investment
  management business

19
Borrowings
Leverage

• Gross debt (including hybrid debt) divided by
  (gross debt equity)
• As per (i) but hybrid debt classified as equity
  due to its perpetual nature

20
Financial income and expenses
21
Agenda

• Introduction and Highlights Ray King, Chief
  Executive
• Group Financial Review Tom Singer, Group Finance
  Director
• Segmental Results Tom Singer, Group Finance
  Director
• - UK Insurance
• - International Insurance
• - Care Homes
• - Other Health Services
• Cash and Debt Tom Singer, Group Finance
  Director
• Strategy and Outlook Ray King, Chief Executive

22
Group Strategic Priorities

• Groups strategic focus remains on integrating
  and realising synergies from our recent
  acquisition activities
• Continue to drive organic growth over the medium
  term
• Capitalise on our market leading positions and
  our unique focus on health and care
• Manage our businesses in a careful and prudent
  manner, with focus on cost, cash and capital
  management
• Deliver high-quality services to our customers
  and deliver excellent value for money
• Pursue selected development opportunities

23
Operating priorities
UK Insurance

• Implement new operating system which will enable
  UKM to respond quickly and efficiently to market
  needs
• Develop opportunities in areas such as the
  Business market, Wellness, BHA, Bupa Health
  Dialog UK
• Bupa International will seek to maintain
  leadership through differentiation and continue
  to develop big opportunity markets

International Insurance

• Bupa Australia/MBF continue the integration
  programme in order to deliver synergies and
  benefits to customers
• Sanitas continuing differentiation in what is a
  highly competitive market Manises start up
• Improve profitability in Latin America

Care Homes

• UK continue focus on operations to maximise
  efficiency as well as service to customers
• Spain grow occupancy levels in new homes
• Australia/New Zealand take advantage of demand
  for nursing home places and high dependency care
• All markets demonstrate healthcare leadership
  through excellence in dementia care

Other Health Services

• Health Dialog continue with integration and
  further exploit its capabilities across the Group
• Progress investment in The Bupa Cromwell Hospital

24
Outlook

• Trading conditions will weaken, but Bupas
  breadth of activities in terms of geography,
  sector and focus on health, will help us to
  weather recession in our key markets
• Integrations are well advanced and benefits on
  target
• We continue to invest selectively to build our
  position in our key markets
• The Group remains highly cash generative
• Immediate priorities for the Group include
  prudent cost, cash and capital management and the
  continued repayment of existing bank borrowings

25
Full Year Results Presentation12 Months Ended
31 December 2008

• Questions and Answers

26
Appendix - Definitions

• Underlying surplus before taxation expense
  excludes non-recurring items mainly including
  adjustments relating to Bupa Ireland,
  amortisation of intangible assets arising on
  acquisition, impairment of equity accounted
  investments, impairment of goodwill and
  intangible assets, profit/(loss) on sale of
  businesses and assets and associated pension
  curtailment credits, the impact of property
  revaluations, realised and unrealised foreign
  exchange gains and losses and the absolute return
  on alternative assets.
• Organic growth in revenues and surplus excludes
  the impact of foreign exchange and the impact of
  acquisitions and disposals.
• References to FY08 and FY07 refer to the results
  for the years ended 31 December 2008 and 31
  December 2007 respectively.
• References to HY08 and HY07 refer to the results
  for the six months ended 30 June 2008 and 30 June
  2007 respectively.
• Surplus is the surplus before impairment of
  goodwill, impairment of intangible assets arising
  on acquisition, other (charges)/income, and
  financial income and expenses, and also excludes
  unallocated overheads and amortisation of
  intangible assets arising on acquisition.